Rights & Responsibilities of

banks and their customers

Usha Thorat
Deputy Governor, Reserve Bank of India
October 6, 2008

Customer Service - Overarching Principles

Banks exist because of customers they
lend customers deposits with a margin
Treating customers fairly transparency
reasonableness, simple and clear
documentation, educating customers
Treating bankers fairly- become aware and
financially literate, borrow responsibly, use
products prudently

Customer Protection - Our Approach

Code of conduct - principle of self
regulation - Role of BCSBI
RBI regulations - master circulars dissemination through website http://www.rbi.org.in/commonman/English/Scripts/Notification.aspx
http://rbi.org.in/scripts/BS_ViewMasterCirculardetails.aspx

Complaint redressal machinery at branch ,

Nodal office, Head office
BOs Offices; Customer Service Dept., RBI

Interest rate related complaints

Banks responsibility

Explain these in writing; give examples

How is interest calculated?

Fixed interest - what is the reset clause?
Floating rate - what is the benchmark used?

Clearly state terms/conditions in loan document

Customers responsibility

Read before you sign!

Do not ignore your doubts - Get them clarified
Never sign blank documents
If DSAs have contacted you, check with the bank

Penal Interest
Banks responsibility

Explain clearly
when penal interest will be levied
Concept of service charges when penal interest is
levied

Customers responsibility

Remember
Defaults/delayed payments, cheque returns etc.
attract penal interest and service charges
Funds need to be set aside for repayment of loan on
due dates
Seek banks advice, if in difficulty

Service Charges
Banks responsibility
Display service charges
Extend concessional rates to special category persons
Have a cap on all charges, incl. interest rates & penal
charges
Inform customers of changes; offer option to
discontinue facility
Customers responsibility
Read all the material sent to you by the bank
Remember
banks have freedom to set interest rates/service charges
you have option to choose the bank which offers best rate

Compare rates - make informed choice

Loan Documents; Return of Securities

Banks responsibility
Give customer a complete set of loan agreements
and enclosures at time of sanction /disbursement
Return the securities as soon as the loan is repaid
Customers responsibility
Get a complete set of loan documents from banker
Read the MITC- Most Important Terms and
Conditions
Get securities back, as soon as loan is repaid

Recovery of Bank Dues

Banks responsibility
Place list of recovery agents on web site
Train & sensitize recovery agents
Ensure recovery agents follow code of conduct
Record all conversations with customers
Customers responsibility
Remember :
All loans have to be repaid
Not to borrow beyond your repaying capability
Conversation you have with the recovery agent is
recorded

Seek assistance of your bank if in problem

Insurance linked products

Banks responsibility
Avoid offering bundled products
Explain and get explicit written consent
Ensure Insurance policy is obtained & active
Customers responsibility
Understand components of your loan product
If insurance is part of it, ensure policy is in
force

Credit cards
Banks responsibility
Do not issue unsolicited cards - if activated & charged,
pay prescribed compensation without demur.
Do not issue unsolicited products on cards
If DSAs are sourcing credit card, ensure card holder
has signed & understands his responsibility
Delivery of Cards & PINs only to person concerned
Stop lost cards immediately on report of loss
Consider insurance on lost cards
Send statements on time; use e-statements, SMS alerts
etc to keep the card holder informed of payments, due
dates etc

Credit Cards
Customers responsibility
Keep your credit card safely
Be present when card is used by merchant estab.
Do not use public computers for internet purchase
through credit cards
Keep credit card number & help line detail handy
Report immediately loss of card
Opt for card statements by email or / and SMS
If you do not want a card, cut it and send it back
to the credit card issuing authority

ATMs
Banks responsibility
Ensure ATMs are in working mode at all times
Have CCTV in all ATMs
Check audit trails periodically
Check cash handling processes and procedures
Check for quality of notes stacked in the ATMs
Customers responsibility
Keep ATM cards safely
Do not keep the PIN with the Card
Inform discrepancy immediately, if possible with
the witness of the security guard

Cheque Drop Facility

Banks responsibility
Remember - Cheque drop facility is only an
alternate mode of cheque collection
Box should bear legend indicating that it is an
alternate mode and that customers can get
acknowledgement if required
Install automatic cheque acknowledging machines
which give receipt on dropping the cheque
Customers responsibility
Insist & obtain acknowledgment for cheques if you
want them

TDS
Banks responsibility
Apprise account holders, specially senior citizens -need
to submit 15G/15H forms, if tax is not to be deducted
TDS certificate is to be issued immediately to the account
holder in person or by post
Customers responsibility
Remember:
TDS is banks statutory obligation
If you are not an income tax assess; give 15G/15H form to the
bank
If you failed to keep your bank informed & TDS has been
deducted, than claim refund from Tax authorities and not the
bank

Cheque Collection
Banks responsibility
Display banks cheque collection policy
Adhere to the displayed policy
Levy charges as per RBI stipulations
Compensate customer without waiting for request
for any delay
Customers responsibility
Read the cheque collection policy
Insist & obtain admissible compensation for delay

Some quotes for banks to ponder!

Customer service is not a department, it's an
attitude!
Customers dont expect you
to be perfect. They do expect
you to fix things when they go
wrong
If we dont take care of our
customers, someone else will!